Virtual reality and its lead in the second tech stock boom

We speak to Richard Li, executive chairman of the first public Australian virtual reality (VR) company Go Green Holdings, about the potentials of VR and the opportunities it offers to Aussie investors.

Virtual reality, often referred to as VR, has recently received an unprecedented amount of hype both internationally and in Australia. With almost every global tech giant investing hundreds of millions in VR technology, it must make you wonder what’s fuelling this “gold rush” mentality. finder.com.au spoke to Richard Li, expert investment banker and the man behind Australia’s first public VR company.

What is virtual reality?

Li considers VR an umbrella term that covers both virtual reality and its sister technology, augmented reality. “There is a broader definition of virtual reality,” he says. “[But simply put,] it is a multimedia platform moving onwards from the existing Internet of things platforms.

“What we are already seeing is an increasing convergence between communications, entertainment and media. It was initially started by the Internet, and VR will now accelerate this convergence at a much faster pace. VR will truly be the fastest growing media platform.”

Old technology but new boom

You may be surprised by the fact that VR isn’t that new. Its early origins were in the ’50s, and many tech companies experimented with VR throughout the ’80s and ’90s. However, due to limitations in other supporting technologies, these attempts saw little success. It was also premature to try and introduce such a revolutionary concept to a global audience which was still using brick-sized mobile phones. You need look no further than Nintendo’s Virtual Boy, often referred to as one of the biggest tech flops in history, to see why these early attempts didn’t work.

VR is currently used predominantly in gaming and entertainment. International game developers venturing into VR include those working on Deus Ex, Mr Robot and Gran Turismo. However, as Richard says, recent developments in various technologies will now enable VR to take off and become bigger than anything else we have ever seen. Even bigger than the Internet itself.

“Amongst other technologies, VR will be able to leverage upon the smartphone market. There are already 3 billion smartphone users globally and this number will double to 6 billion by 2020. VR can be easily incorporated into smartphones and other wearable “smart” technologies.”

Limitless potentials and ultimate media platform

Despite much existing criticism, supporters of VR believe that it is full of potential and will become the ultimate media platform for humankind. Reports suggest that by 2020, the virtual reality industry will be worth more than $150 billion, and 2.5 million Aussie households will own a VR headset. Go Green further forecasts that China will account for half of this market value and that its potential VR population will reach 450 million.

“VR will infiltrate more industries than we ever expected. It’s much more than just gaming and entertainment. It will become a revolutionary tool for countless applications, and we believe the most prominent of these will be social media and retail shopping,” Li says.

“Platforms such as Facebook and WeChat gave birth to the first revolution in social media and VR will bring about the second. Imagine “sitting” in the same room as your family and friends who are on the other side of the world. Along similar lines, Alibaba and Amazon have forever changed the shopping experience. Now imagine that experience being transformed through VR. You visit a website, “enter” the store and experience the product “in your own hands”, before deciding whether you want to go ahead with the purchase.”

Second wave of technology stock boom

Calling himself a “big picture guy”, Richard isn’t shy about his confidence in the VR market. Having spent 30 years in investment banking, equity funds management, investment advisory and stockbroking, Richard’s experience tells him that the second tech stock boom is coming, and it will focus on VR.

“Looking forward, the next Tech Stock Boom is to come at the expense of old economy stocks. From a historical point of view, this boom is inevitable. In fact, we are already seeing the early signs of this. Earlier this year, traditional stocks like Ten and JB Hi-Fi came smashing down, whilst the Nasdaq has reached its all-time high. New technology is already moving forward with good momentum and its pace will be accelerated through VR.”

“Investors should act now to recognise the potentials of VR. When VR eventually takes off, everyone will follow herd mentality and it will be too late to jump onto the bandwagon then.”

What’s with the giant VR headsets?

Sceptics of VR technology often say that VR will never be big as it is heavily limited by the size of its headsets. Indeed, you may have noticed that most VR devices currently available are heavy and chunky. However, Richard doesn’t consider this to be a major challenge.

“At the end of the day, virtual reality is a concept. The form factor that enables VR experience can and will always change according to market demand and consumer preference. We can expect VR hardware to resemble that of a sleek pair of sunglasses. Large headsets will become a thing of the past in the next two years.”

Richard also believes that consumers who enjoy VR wouldn’t mind wearing a headset in the first place. “It’s a very small trade-off against fully emerging into an extremely satisfying experience,” he says. “For those who prefer more mobile facilitators, they can always choose to opt for augmented reality, which requires lower specs but is just as enjoyable.”

Interacting with other high-end technologies

Technology is advancing at a rate never seen before and there are many other developments happening alongside VR. “There’s no doubt in that VR will work side by side with AI, machine learning, big data and other technologies. We are already seeing some collaborative applications; for example, in equipment assisting stroke victims to recover their mobility.”

Relationship with telcos

Go Green strongly advocates for a collaborative relationship between VR and telecommunication companies. Li illustrates this by describing his personal experience over one weekend. He was shocked when he was notified that he had used 9GB of his 12GB iPhone data plan, after watching only two hours of VR content.

“VR is extremely data intensive. If it is to push the convergence of those three things we mentioned (AI, machine learning, and big data), the assistance of telcos is absolutely essential. Without their support, it will be restricted by data traffic limitations.”

However, Richard believes that VR also has a lot to bring to the table for telcos. “Many traditional telcos are becoming increasingly interested in media. Led by Telstra in Australia, they are becoming data traffic businesses. A partnership will be beneficial for both parties, as VR will generate new traffic and revenue.”

Li offers as an example the recent launch of VR-enabled smartphones from both Lenovo and ASUS. “I can confidently say that the telco industry’s involvement in virtual reality and augmented reality will become very significant within the next 18 months.”

Aussie investors can start investing in VR today. You can invest in international tech giants with VR operations through Australian online share trading platforms. You can also invest in Go Green Holdings, which is expecting ASX listing in the second half of 2017.